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How "natural" are natural monopolies in the water supply and sewerage sector ? Case studies from developing and transition economies, Volume 1
Author:Nauges, Celine; van den Berg, Caroline; Country:Brazil; Moldova; Colombia; Vietnam;
Date Stored:2007/02/09Document Date:2007/02/01
Document Type:Policy Research Working PaperSubTopics:Urban Water Supply and Sanitation; Town Water Supply and Sanitation; Economic Theory & Research; Water and Industry; Water Supply and Sanitation Governance and Institutions
Language:EnglishRegion:Europe and Central Asia; East Asia and Pacific; Latin America & Caribbean
Report Number:WPS4137Collection Title:Policy, Research working paper ; no. WPS 4137
Volume No:1  

Summary: Using data from the International Benchmarking NETwork database, the authors estimate measures of density and scale economies in the water industry in four countries (Brazil, Colombia, Moldova, and Vietnam) that differ substantially in economic development, piped water and sewerage coverage, and characteristics of the utilities operating in the different countries. They find evidence of economies of scale in Colombia, Moldova, and Vietnam, implying the existence of a natural monopoly. In Brazil the authors cannot reject the null hypothesis of constant returns to scale. They also find evidence of economies of customer density in Moldova and Vietnam. The results of this study show that the cost structure of the water and wastewater sector varies significantly between countries and within countries, and over time, which has implications for how to regulate the sector.

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